Jamie Dimon, the JPMorgan Chase CEO, said he would not buy the broad stock market or long-dated U.S. Treasurys at current prices, citing geopolitical conflict, rising government debt, and the possibility that interest rates will remain higher than investors expect.
“I do think those risks are probably bigger than other people think,” Dimon said on “The Master Investor Podcast” with Wilfred Frost, according to a CNBC report.
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Markets may be overlooking serious risks
Investors have largely shrugged off wars, tariffs and political tensions. The S&P 500 has returned nearly 10% this year, supported by continued consumer spending, moderating inflation and enthusiasm surrounding artificial intelligence.
Dimon is less comfortable.
He pointed to wars in Ukraine and the Middle East, tensions between the United States and China, rising military spending and persistent federal budget deficits. The global economy has become more resilient, he said, but that does not mean it can absorb every shock indefinitely.
“You may need more straws in the camel’s back to cause that tipping point,” he said.
Neither stocks nor Treasurys look cheap to Dimon
Asked directly whether he would buy long-dated U.S. Treasurys, Dimon answered, “Personally, no.” His concern centers on federal borrowing. Persistent deficits could eventually cause investors to demand higher yields before lending the government more money.
When market interest rates rise, prices on existing bonds generally fall. Long-term bonds tend to be hit harder because investors are locked into their lower yields for longer.
Even if inflation returns to the Federal Reserve’s 2% target, Dimon said the 10-year Treasury yield probably belongs between 4% and 4.5%. From his perspective, that leaves little room for Treasury prices to rise.
Investors who hold a Treasury until maturity generally receive its full face value. But anyone who needs to sell early could receive less than expected if rates climb.
He was similarly cautious about the stock market. He said he might buy an individual company if it represented a strong investment, but he would not buy the broader market at its current valuation.
That is not the same as predicting an imminent crash. Markets can remain expensive for years, and current prices may already account for the risks everyone can see. What prices cannot account for, Dimon said, is how those risks actually resolve.
“It’s possible something’s baked in, but what’s not baked in is what actually happens,” he said.
The AI boom may reward different companies
Dimon also compared today’s spending on artificial intelligence with the early internet boom. The technology will probably produce meaningful economic gains, he said, but the payoff may not arrive when investors expect or benefit today’s most prominent companies.
Yahoo and Netscape were early internet leaders, while later arrivals including Google and Facebook became the dominant winners. AI could follow a similar pattern.
“Will it pay off the way you expect and the timetable you expect? Definitely not,” Dimon said.
Retirees have the least room to recover
Dimon’s warning matters more to retirees than to workers with decades left to invest. A younger investor can keep contributing during a downturn and wait for prices to recover. A retiree may need to sell investments during the decline to cover ordinary expenses, turning a temporary loss into lasting damage.
He offers no way out of this bind. He is only warning that markets may be underrating the risks, and that a retiree has less time than a younger investor to recover if he’s right.
Two things decide how much this matters to you: how much of your retirement rides on markets holding up, and how long you could wait out a drop if they don’t. With gold hitting record highs in recent months, maybe now is a good time to take a look.
